Tokyo inflation accelerated more than expected this month as other data showed the economy moving broadly in line with Bank of Japan (BOJ) projections, feeding speculation over a possible rate hike next month and bumping the yen.
Consumer prices excluding fresh food in the capital climbed 2.2 percent from a year earlier this month, picking up from 1.8 percent largely on a winding down of energy subsidies, according to the Japanese Ministry of Internal Affairs and Communications yesterday.
Overall inflation rose to 2.6 percent, as food prices also pushed up the gauge, outpacing economists’ expectations.
Photo: Bloomberg
The yen strengthened after the report from 151.34 against the US dollar to as much as 150.01, as the outcome offered support for the view that the BOJ might hike rates again next month. Overnight swaps suggest a 63 percent chance of the BOJ moving at its next meeting.
Market expectations for the move have roughly doubled this month as BOJ Governor Kazuo Ueda has repeatedly said borrowing costs would be raised if the economy performs in line with the central bank’s view.
Separate reports yesterday showed the job market remained relatively tight, with the jobs-to-applicants ratio ticking up to 1.25 last month, and the jobless rate rising slightly to 2.5 percent.
“Overall, none of the economic data today stops the BOJ from mulling a rate hike,” said Taro Saito, head of economic research at NLI Research Institute. “If financial markets are calm, they could move in December.”
Yesterday’s Tokyo consumer price index (CPI) data is the last government inflation report before the central bank makes a decision on its benchmark rate on Dec. 19. Last week Ueda said it is not possible to predict the outcome of the meeting, hinting that the next meeting would involve a discussion over whether to raise interest rates.
The fall in energy subsidies stems from a previous decision by former Japanese prime minister Fumio Kishida to phase out what was supposed to be a temporary measure. Kishida’s successor Shigeru Ishiba has decided to reintroduce the measure from January. The impacts from subsidies tend to be reflected in inflation data with a lag.
There are also some signs that underlying inflation remains strong beyond the impact of reduced subsidies. Food companies are planning price increases on 3,933 products next year, two and a half times this year’s initial plans, according to a Teikoku Databank report yesterday.
“The consensus-beating pickup in Tokyo’s November inflation is the latest sign consumer price pressures continue to build in line with the Bank of Japan’s outlook. The hotter core reading reflected a rise in utility prices after energy subsidies were rolled back,” said Taro Kimura, an economist for Bloomberg Economics.
The BOJ’s 0.25 percent policy rate is expected to change soon. More than 80 percent of economists surveyed by Bloomberg forecast another hike by January. The Tokyo CPI figures follow a range of recent economic data, including GDP, that show the economy is in a moderate recovery.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
SEASONAL WEAKNESS: The combined revenue of the top 10 foundries fell 5.4%, but rush orders and China’s subsidies partially offset slowing demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) further solidified its dominance in the global wafer foundry business in the first quarter of this year, remaining far ahead of its closest rival, Samsung Electronics Co, TrendForce Corp (集邦科技) said yesterday. TSMC posted US$25.52 billion in sales in the January-to-March period, down 5 percent from the previous quarter, but its market share rose from 67.1 percent the previous quarter to 67.6 percent, TrendForce said in a report. While smartphone-related wafer shipments declined in the first quarter due to seasonal factors, solid demand for artificial intelligence (AI) and high-performance computing (HPC) devices and urgent TV-related orders
Prices of gasoline and diesel products at domestic fuel stations are this week to rise NT$0.2 and NT$0.3 per liter respectively, after international crude oil prices increased last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week snapped a two-week losing streak as the geopolitical situation between Russia and Ukraine turned increasingly tense, CPC said in a statement. News that some oil production facilities in Alberta, Canada, were shut down due to wildfires and that US-Iran nuclear talks made no progress also helped push oil prices to a significant weekly gain, Formosa said
MINERAL DIPLOMACY: The Chinese commerce ministry said it approved applications for the export of rare earths in a move that could help ease US-China trade tensions Chinese Vice Premier He Lifeng (何立峰) is today to meet a US delegation for talks in the UK, Beijing announced on Saturday amid a fragile truce in the trade dispute between the two powers. He is to visit the UK from yesterday to Friday at the invitation of the British government, the Chinese Ministry of Foreign Affairs said in a statement. He and US representatives are to cochair the first meeting of the US-China economic and trade consultation mechanism, it said. US President Donald Trump on Friday announced that a new round of trade talks with China would start in London beginning today,
RSS